Losses Slashed by $3 Billion, New GM Leaders Say : Autos: Wall Street analysts are told that the company is ahead of schedule in cutting costs and will break even next year.

The new leadership at General Motors Corp. told the investment community here Thursday that it has slashed its losses in North America by $3 billion in a year’s time and will cut them by another $3 billion to break even in 1993.

In a daylong meeting with 200 Wall Street analysts aimed at forestalling further cuts in its credit ratings, more than a dozen top executives of GM portrayed the auto giant as ahead of schedule in cutting costs and said it will return to profitability without gaining ground in a flat auto market.

But GM did not disclose any major new cost-cutting initiatives, and its hoped-for announcement of a big worker buyout agreement with the United Auto Workers union--intended to please analysts here--was stalled at the last minute.

And while proclaiming improvements in its relationship with the UAW, GM had to downplay the results of a union audit contending that some company plant managers were shifting large sums of money from a fund for laid-off workers and applying it toward production payrolls. The audit, disclosed at a UAW meeting in Las Vegas, found that at one plant alone, $28 million was shifted from the layoff fund to the payroll.

Though it is all GM’s money, such a shift would partly explain why the layoff fund is almost empty. The fund, which once totaled $3.35 billion, could run out as early as January, company sources have said.

If it is true, Chief Executive John F. (Jack) Smith Jr. said, “we will reverse it immediately.” Smith noted that the layoff fund in question, called the Jobs Bank, is jointly administered by the company and the union at each plant. Union officials conceded that both sides are to blame.

There was no dramatic response on Wall Street to what GM’s executives had to say. GM’s stock price, which has tumbled to the $30 range in recent weeks, gained 3/8 of a point to close at $30.50. Analysts met with GM officials into the evening and weren’t immediately available for comment.

“We’ll find out tomorrow,” said William Hoglund, executive vice president and one of only two GM managers on the board of directors.

GM’s mission here was partly a fence-mending one, attempting to re-establish credibility with investment analysts after years of self-portrayals that gave little hint of the growing troubles that led to a $4.45-billion loss last year, the worst in U.S. corporate history. The loss in GM’s U.S. car and truck business was estimated at $7.1 billion.

“The difference between this presentation and the ones in the past is the guys who are making the changes made the presentation,” said Hoglund, referring to addresses by managers from engineering, sales, purchasing and other disciplines. “It always used to be just the financial guys.”

Asked if that made Thursday’s presentation more honest and realistic, he said, “Both.”

Said Smith: “We put on a presentation for Moody’s (a credit rating agency that has threatened to downgrade GM’s credit standing) that is as aggressive as anything I’ve witnessed in my career. There is nothing beyond what we showed them.”

Reeling from management turmoil that led to last month’s ouster of Chairman and Chief Executive Robert C. Stempel, the company was trying to temper the conventional wisdom that GM has made little progress in hacking away at its bloated cost structure since a series of reorganizations and plant-closing announcements were made earlier this year.

Smith and his tough new purchasing czar, J. Ignacio (Inaki) Lopez, said the company has reduced its costs for materials by $2 billion in one year instead of the expected two years. Those cuts will total nearly $4 billion a year from now on, Lopez said.

Hoglund said GM’s North American operations lost $3 billion on operations in the first nine months of this year, down from $6.1 billion in the same period last year. Nearly half the improvement was because of cost reductions, especially those managed by Lopez, he said.

Meanwhile, GM’s all-important relations with the UAW and its GM department, headed by Stephen P. Yokich, are “much better than has been portrayed in the press,” Smith said. And GM’s managers outlined steps to end wasteful sales and marketing practices such as having its own car divisions compete against each other.

Summarizing for reporters what they told analysts, GM executives also said:

* They expect the number of dealership locations to gradually decline to 7,000 from 9,000 now, accelerating a long-running attrition.

* Already committed to cutting the U.S. white-collar work force to 71,000 next year from 91,000 last year, the company will probably have to cut another 10,000 salaried jobs to achieve Japanese-level staff efficiency. No deadline was set. Seven additional plant closings will be announced before the end of this year.

* The company expects 1993 U.S. car and truck sales to increase just 5% from this year’s poor levels and, conceding that it had few new products this model year, said it will probably lose a bit more car market share and only hold its own on trucks.

Hoglund said the big reduction in losses in 1993 will come partly from the sale of a richer “mix” of cars, especially a steep cutback on low-profit sales to rental car companies and fewer rebates on retail sales. GM has also stopped building cars without orders for them, a practice that was aimed at keeping plants running.

But some analysts believe that such steps are window dressing compared to the need for cooperation from the UAW. Analyst David Garrity of McDonald & Co. said: “The ideal scenario for me would be if Steve Yokich stepped up to the podium and said, ‘Whatever Jack Smith wants, I’ll support.’ ”

But the two sides’ inability to reach agreement on an early retirement plan for UAW workers in time for GM’s pirouette with analysts underscores the tensions that remain.

Yokich told UAW representatives from GM plants meeting in Las Vegas Wednesday that negotiations had “taken a step backward.” He seemed in no rush to hurry the negotiations along Thursday afternoon as he played the slot machines at a casino in the hotel where the meetings were being conducted. But UAW officials were hopeful that the issue would be resolved before they went home today.

The need for a worker buyout plan was heightened by the premature draining of the Jobs Bank money, chiefly the result of heavier than expected worker layoffs since the fund was created in 1990 to assure full pay for those who lost their jobs.

As GM mulls which plants to close, there is pressure on plant managers and local union officials to make their plants efficient and profitable. The UAW audit said that local company and union leaders used money from the Jobs Bank to pay production workers, thus lowering payroll costs and making their plants look good.

“It’s just a way for the plant managers and the local bargaining units to look good. If your plant is in the black, then you’re going to stay open,” said Mike Myers, a skilled tradesman from Syracuse, N.Y. “But we were mad when we heard about it. We don’t want (laid-off workers) to run out of funds.”

Yokich told workers that the $28 million shifted from the Jobs Bank at a single plant is enough to fund the entire Jobs Bank for two weeks. The fund supports about 22,000 laid-off workers. The company and union are trying to learn how widespread the practice is.

Times staff writer Amy Harmon contributed to this report from Las Vegas.